LAUSR

This work investigates a service-oriented manufacturing supply chain in which a manufacturer and an operator make decisions about equipment quality and maintenance service. Both the manufacturer and the operator have to make tradeoffs between equipment quality and maintenance service to maximize their own profit, which can lead to supply chain conflict. Decision models under decentralized decisions are formulated first for the manufacturer and the operator to make their respective independent optimal decisions, and a decision model under centralized decisions is formulated to obtain optimal decisions for the supply chain. The results show that channel coordination is not achievable and an agreement cannot be reached with decentralized decisions. To address this issue, two, i.e., a cost-sharing and a performance-based, strategies are introduced to coordinate the supply chain. The results reveal that the manufacturer and the operator are motivated to find the optimal decisions to maximize the profit of the supply chain when the subsidy rate or the penalty rate is equal to the profit margin of the operator. The models and the coordination strategies are extended to the situation considering the learning behavior of the manufacturer. The results show that the learning behavior impacts the profit of the supply chain with coordination and the preferences of the coordination strategy in the supply chain.